Design is critical: Value proposition is paramount

I’ve just read an interesting post on Venturebeat lamenting the fact that investors get carried away with design and user experience:

If the user experience seems to be great, often investors will conclude the founders have found product-market fit and the basic unit economics become less relevant. The path to profitability in most cases becomes: You’ll get profitable if you’re big enough.

The better alternative they say is to build something people want:

In 2014, we went through Y Combinator, whose mantra famously is “Build Something People Want” not“Build Nice Things, People May Want Them.” This is certainly something we take to heart.

At the end of the day this final conclusion is the right one. It is more important to build something people want than to build something that looks nice. Going further, what every company actually needs is a strong value proposition, where:

Value (to the customer) = Benefits – Cost

That’s an equation out of strategy textbooks from the 1990s, but it is entirely relevant to startups. Not only do you have to build something that people will want (i.e. it has benefits) you have to do so at cost that is acceptable to the customer and allows you to make a profit.

Design and user experience have grown more important in recent years because the benefits of convenience and joy in using a product are increasingly used as competitive weapons, but it is important to remember that without a strong primary benefit convenience means nothing and there is no joy.

In practice startups should focus first on building a product that resonates emotionally with customers. That product will have a strong primary benefit (e.g. quotes from four lawyers within 24 hours from our portfolio company Lexoo) and just enough design to make it usable by early adopters. If investors are over-indexing on design it is likely because ‘just enough design’ is becoming more and more as higher standards of design are becoming more pervasive generally.

Hi Nic, interesting chicken or egg debate. I would say the importance of design & UI are dependant on the sector. For mobile games, I think they are more important than value proposition to the client; for ecommerce, UI is important as well, whereas for social networking, design & UI matter very little, in contrast to SaaS enterprise software in which UI is just as important as their core product of services. But most importantly, people prefer speed, fast loading times, and a bug free experience. If any of those are missing, people will abandon it, even if it has a product or service they really want.